The outgoing Croatian minister of finance, Zdravko Marić, spoke to EURACTIV forward of his final ECOFIN assembly of European finance ministers, stressing that Croatia had undergone critical fiscal consolidation to fulfill the convergence standards and that it will proceed to be a “constructive accomplice”.

It was a visibly relaxed and content material minister that greeted EURACTIV on the premises of the Croatian illustration in Brussels on Monday (11 July). And it isn’t laborious to know why.

On Tuesday, Croatia is about to get the inexperienced gentle by EU finance ministers to hitch the euro in January 2023, bringing the full variety of euro space member states to twenty. Because the Croatian finance minister for the previous six and a half years, Marić was in all probability extra carefully concerned within the euro accession course of than every other Croatian politician.

Croatia’s euroised economic system

“On the very starting of our mandate again in 2016, this was outlined as certainly one of our strategic targets,” Marić stated. “It was a method to extend the residing requirements, the extent of employment, the extent of wages as our final purpose,” he added.

Extra particularly, the finance minister argued that becoming a member of the euro would result in decrease overseas alternate danger, decrease rates of interest and financing prices, and decrease inflation. The potential downside of dropping the financial sovereignty was not very salient in his opinion, since a big a part of the Croatian economic system is euroised already.

“Our monetary system is already so built-in into the system of the European Central Financial institution (ECB) that I might say that the extent of financial freedom is sort of restricted,” Marić instructed EURACTIV, mentioning that the 4 largest business banks in Croatia had been Italian and Austrian and that over half of Croatian commerce was denominated in euro.

He subsequently dismissed criticism by the previous Croatian Prime Minister Jadranka Kosor, who stated Croatia ought to have pulled the break on euro accession in order that the federal government might combat the financial issues that lie forward.

Marić even argued that being a part of the euro space would assist Croatia react since some overseas alternate dangers could be mitigated and the associated fee for private and non-private borrowing would go down.

German phrases of warning

One other fear about Croatia’s euro accession comes from Berlin, the place far-right member of parliament Norbert Kleinwächter argued in a parliamentary dialogue that Croatia would turn out to be “the brand new Greece”.

Even politicians from the centre-right CDU and the liberal FDP, who each welcomed Croatia’s euro accession, despatched out phrases of warning that fiscal consolidation was wanted.

Nonetheless, Marić argued that Croatia did a very good job at fiscal consolidation prior to now years. “From 2017 to 2019 we even had a budgetary surplus,” he stated. He added that Croatia had confirmed that it was “at all times a constructive accomplice.”

In line with him, there have been additionally some Croatian specificities that needed to be taken into consideration. “We nonetheless really feel sure repercussions of our homeland conflict two and a half many years in the past,” Marić stated, arguing that the massive numbers of conflict veterans defined the comparatively excessive fee of early retirement within the nation.

He referred to Croatia’s 1991-95 conflict that adopted after it declared independence from Yugoslavia.

Political or technical standards?

Within the European Fee’s 2022 convergence report that laid the idea of the Fee’s resolution to recommend accepting Croatia’s bid for the euro, Croatia had no issues in fulfilling a lot of the standards.

Nonetheless, Croatia solely met the criterion of value stability as a result of the Fee had calculated it in a means that didn’t embody all international locations, thus elevating some doubts on whether or not the supposedly technical process of admitting Croatia had been politically influenced in favour of Zagreb’s accession.

Requested about whether or not the method was swayed by some political goodwill from the EU establishments, Marić remained obscure however stated: “I really want to thank all of the European establishments. They assisted all through this entire course of, not simply by way of assembly these standards.”

Whereas the convergence course of pressured Croatia to take a path of fiscal consolidation, the nation, which joined the EU in 2013, will probably be slightly freer to pursue its fiscal coverage as soon as it’s contained in the euro space. On the flip aspect, it’ll even be extra straight affected by the structural weaknesses of the euro space, which dangers fragmentation in occasions of disaster.

Nonetheless, Marić remained cautious on the query of how the structural weaknesses of the eurozone might be resolved and its macroeconomic governance framework might be reformed. Relating to the structural weaknesses, he referred to as for the completion of the banking union. “It implies that we’re prepared and we’ll stand for one another,” he stated.

Relating to the reform of fiscal guidelines, the Croatian finance minister additionally appeared to keep away from taking any aspect of the talk. Whereas he pressured the significance of sustainable public funds, he additionally stated that “not at all can it’s a objective by itself.”

Final week at work

Marić elegantly prevented taking a place on probably the most controversial points that will probably be mentioned amongst EU finance ministers in immediately’s assembly and within the conferences that can observe.

Given the dire financial outlook for Europe in gentle of the Russian invasion, his relatively light-hearted method is likely to be shocking, however that is Marić’s final week of labor on this place, after finishing a mammoth job for his nation.

Having introduced his retreat from Croatian politics final week – for private causes, as he says – Marić won’t really feel as burdened as different EU finance ministers at present are by the troubling financial outlook.

Croatia’s finance minister to give up authorities

Finance Minister Zdravko Marić will depart the Croatian authorities for private causes, a number of Croatian media reported on Tuesday, although the information was not publicly confirmed.

Večernji Checklist, the biggest-selling each day, stated it obtained affirmation from the federal government that Maric, who had accomplished …

[Edited by Zoran Radosavljevic]